Red flags in financial reporting - empirical studies in the AeRO market

Tatiana Dănescu (), Ioan Ovidiu Spătăcean () and Roxana Maria Stejerean ()
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Tatiana Dănescu: Faculty of Economics and Law, Department of Economic Sciences ED1, University of Medicine, Pharmacy, Science and Technology "George Emil Palade" of Targu Mures, Gheorghe Marinescu, nr. 38, Targu Mures, 540139, Romania
Ioan Ovidiu Spătăcean: Faculty of Economics and Law, Department of Economic Sciences ED1, University of Medicine, Pharmacy, Science and Technology "George Emil Palade" of Targu Mures, Gheorghe Marinescu, nr. 38, Targu Mures, 540139, Romania
Roxana Maria Stejerean: University "1 Decembrie 1918" of Alba Iulia, Strada: Gabriel Bethlen, nr. 5, Alba Iulia, 510009, Romania

Acta Marisiensis. Series Oeconomica, 2021, vol. 1, 15-28

Abstract: Understanding the factors that cause fraud and properly defining key areas of conduct is one of the most effective ways to detect potential irregularities, where the auditor’s professional judgment and skepticism are essential. In this respect, it is necessary to study some key financial indicators, but also to use various procedures to identify and detect fraud and possible manipulation in the financial reporting process. The objectives are aimed at identifying and highlighting possible red flags in companies whose shares are traded on the Bucharest Stock Exchange. The sample considered sensitive to fraudulent financial reporting is composed of four distinct categories of companies, namely: companies recently admitted to trading on the AeRO market administered by the Bucharest Stock Exchange (21), companies that obtained a zero Vektor score in 2020 (9), companies that obtained a low score in the White Letter publication (5), and companies in insolvency (4).

Keywords: Beneish model; fraudulent behaviour; financial reporting; AeRO market; Vektor; White Paper; insolvency; red flags; analytical procedures (search for similar items in EconPapers)
JEL-codes: G41 M41 M42 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:pmu:oecono:v:1:y:2021:p:15-28

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